AN INNOVATIVE EXCHANGE THAT IS DRIVING CHANGE

WITHIN AFRICA’S EXCHANGE SPACE

Stock Enchange of Mauritius

On the back of strong economic growth and positive growth estimates over the coming years, the World Bank has identified Africa as the next frontier and believes it “could be on the brink of an economic take-off, much like China was 30 years ago, and India 20 years ago”. With projected growth of 5.9% in sub-Saharan Africa and 4.2% in North Africa this year according to the IMF and with several African countries expected to be among the 10 fastest-growing economies between 2011 to 2015, global investors are starting to take notice of the African continent. With the World Bank mooting Africa as a place which has the potential to offer considerable investment returns, companies are increasingly looking at ways to enter the market and it is the continent’s premier exchanges such as the Stock Exchange of Mauritius which will become the beneficiaries.

Having been set-up in 1989 as a private limited company responsible for the operation and promotion of an efficient and regulated securities market in Mauritius under the Stock Exchange Act 1988, SEM began operations with five listed companies and a market capitalisation of just under $100 million. However since this time, much has changed and after becoming a public company in 2008, and having overhauled its operational, regulatory and technical framework, the Stock Exchange of Mauritius has become what it is today; a member of the World Federation of Exchanges (WFE) and a dynamic, leading Exchange in Africa with just under 100 listed companies and a market capitalisation of close to $8 billion within its two markets, the Official Market and the Development & Enterprise Market (DEM).

Sunil Benimadhu, CEO of SEM since 1998 and a man with a reputation as a pioneer and a standard-setter within the stock exchange space in Africa, has been at the forefront of

The Stock Exchange of Mauritius Ltd (SEM) has witnessed significant changes to its operational and regulatory framework during the last two years and developed a reputation as being one of the most dynamic exchanges in Africa, resulting in SEM being awarded the title of “Most Innovative African Stock Exchange of the year Award” at the New York Stock Exchange for two consecutive years. As one of the leading Exchanges in Africa and with it pushing ahead with a raft of measures to ensure that it further builds its status as an attractive multi-currency listing and trading platform, the future looks bright. Djamil Benmehidi spoke to Sunil Benimadhu, Chief Executive of the Stock Exchange of Mauritius to find out more.

Endeavour Magazine • December 2012 •

Stock Enchange of Mauritius

SEM’s surge over the last 14 years.“SEM started its operations in July 1989 as a small

pre-emerging Exchange with a manual operating system, but has since then evolved into a sophisticated Exchange which operates a state-of-the-art trading and settlement infrastructure. Market capitalisation hovers around USD 8 billion and the Exchange has proved to be a powerful value-creation platform for many listed companies and has offered investors attractive returns on their investments”

This growth has been achieved partly through ensuring that the Stock Exchange of Mauritius remains at the forefront of institutional reforms and development, providing quality service delivery to stakeholders.

“We have implemented a significant overhaul of our operating system. Trading takes place through workstations which are linked to the centralised SEM trading engine.” Built on third generation technology, the SEMATS system has put an end to traditional trading patterns which had typified the Stock Exchange of Mauritius until April 2001.

Another crucial factor according to Sunil Benimadhu is

the implementation of a Central Depository System (CDS) in 1997. This has led to prompt, efficient clearing and settlement of trades and at the same time reduced some of the inherent risks in the process. With the support of the Bank of Mauritius which acts as clearing bank, CDS ensures delivery versus payment (DVP) on a T+3 rolling basis. The CDS also provides for a Guarantee Fund Mechanism to guarantee settlement failures of participants.

In addition to this, from a foreign investment perspective, the Stock Exchange of Mauritius offers a compelling environment for trading and listing different types of securities because of incentives such as exemption from paying capital gains tax for investors and no taxes on dividends. Another point that makes SEM stand out from its rivals in Africa is the multi-currency trading platform, which means that SEM can trade and settle equity and debt products in Euro, GBP and USD. In line with its reputation for innovation, the Stock Exchange of Mauritius became in June 2011 the first Exchange in Africa to list, trade and settle equity products in these three international currencies, an innovative thrust which has

Stock Enchange of Mauritius

positioned SEM very favourably on the international front and contributed to the internationalisation of the Exchange.

Looking forward to the coming years ahead, the Stock Exchange of Mauritius has committed itself to reinforcing its foundations and maintaining its development momentum in line with its multi-pronged internationalisation strategy of steadily moving from a domestic-equity-focused Exchange to a multi-product-internationally-focused Exchange. In the years to come, the split of listings on SEM is expected to overwhelmingly consist of international funds, international issuers, specialised debt instruments, Africa-based ventures, African-focused Exchange-traded funds and other structured products. The value of products traded and settled in USD, Euro, etc. is expected to increase over time, confirming the internationalised status of the Stock Exchange of Mauritius. Aspirations to emerge as a capital raising platform for Africa-focused investments routed through the Global Business Sector will also be realised and the SEM platform will be used to channel investment flows from South America, Europe and Asia into Africa and from the US, Europe into Asia. The number of issuers, players and investors in their market will increase over time, increasing the breadth and depth of the market in Mauritius, and thereby also bringing a meaningful contribution to the integration of the Mauritius financial services sector within the international financial system. SEM also aims at consolidating its position with a view to further contributing more broadly to the development of the Mauritian economy and of capital market activities on the national and regional fronts.

He who masters the information masters the game

Tel: +230 208 7010Fax: +230 212 9867

anglostockbrokers.mu

He who masters the information masters the game

He who masters the information masters the game

Tel: +230 208 7010Fax: +230 212 9867

anglostockbrokers.mu

He who masters the information masters the game

Anglo-Mauritius Stockbrokers Limited is one of the largest stock broking companies in Mauritius. The company, which started its activities in 1989, has over the years increased its services to offer its clientele a one-stop shop for investments. The investment services offered include trading in listed equities, government bonds, investment advisory, and sponsoring broker. Anglo-Mauritius Stockbrokers Limited also provides extensive research as a valued added service to its clients.

Stock Enchange of Mauritiuswww.stockexchangeofmauritius.com+230 212 9541

Written by Djamil Benmehidi

www.littlegatepublishing.com